Trade and debt woes

The benchmark S&P 500 lifted 0.5 per cent to 2,597, and the tech-heavy Nasdaq rose 0.4 per cent to 6,986.

Most sectors traded higher, with the largest boost coming from industrials and utilities — after both sectors gained 1.4 per cent each.

Investors are still cautiously optimistic about the prospect of the US and China signing a deal to resolve their trade war, following three days of negotiations in Beijing which ended on Wednesday (New York time).

However, the US trade delegation's victorious claim — that China has pledged to buy "a substantial amount" of US agricultural, energy and manufactured goods — has not been confirmed by Beijing.

In addition, a mixed message from Federal Reserve chairman Jerome Powell dampened the enthusiasm of US markets somewhat.

Mr Powell reiterated the views of other policymakers that the Fed would be patient about interest rate hikes.

But major stock indexes temporarily moved into negative territory after Powell said he was "very worried" about the size of US debt, and the Fed's balance sheet would become "substantially smaller".

Cracks forming in US retail

The S&P retail sector (-1.7pc) was the worst performer on Wall Street due to anovernight sell-off in retail stocks.

It was triggered, in particular, by department store chain Macy's, which saw its share price plunge 18.3 per cent to $US25.93.

This was after Macy's slashed its full-year profit and sales forecast on the back of an anaemic holiday season.

Its same-store sales grew by just 1.1 per cent in the critical months of November and December.

Department stores in recent quarters had shown signs they were finding ways to cope with declining mall traffic and tough competition from online giant Amazon.

Another US retail giant, Kohl's, reported similarly muted sales growth for the holidays, sending its shares down 4.8 per cent.

"It looks like the consumer is in good shape but generally there are signs of some slowing in the economy," said Ken Perkins, founder of research firm Retail Metrics.

Consumer confidence in 2019 is seen as likely to be strained by rising US interest rates, the ongoing trade war with China, market volatility due to concerns over global growth and the US government shutdown.

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